Lotte Shopping breaks ground on Ocado-powered robotic warehouse

Industry

Published: 05 Dec. 2023, 15:01 Updated: 05 Dec. 2023, 16:01

Lotte Shopping breaks ground on Ocado-powered robotic warehouse

A render of Lotte Shopping's Busan Customer Fulfillment Center (CFC), which will leverage the Ocado Smart Platform [LOTTE SHOPPING]

Lotte broke ground on a robotic warehouse for online groceries in the southern port city of Busan on Tuesday. The facility utilizes technology from British retailer Ocado.

The automated logistics center, slated to commence operations in late 2025, aims to deliver fresh produce to around 2.3 million households in Busan and South Gyeongsang, with plans to expand to five additional regions across the country.

The groundbreaking ceremony comes approximately a year after Lotte Shopping announced a plan to invest 1 trillion won ($761 million) by 2030 under its business partnership with Ocado, with whom Lotte is an exclusive partner. The new initiative represents an opportunity for Lotte to reinforce its position in the highly competitive online shopping market, where competitors like Coupang have generated notable profits.

Lotte Shopping held a ground-breaking ceremony for its Busan Customer Fulfillment Center (CFC) on Tuesday, with key officials including Lotte Chairman Shin Dong-bin, fourth from right, and Ocado CEO Tim Steiner, third from right, in attendance. [LOTTE SHOPPING]

“We will become a game changer in the domestic online grocery market by establishing a total of six CFCs [Customer Fulfillment Centers] nationwide,” Chairman Shin stated ahead of the ceremony, in which Lotte Shopping CEO Kim Sang-hyun, Busan Mayor Park Heong-joon and Ocado CEO Tim Steiner also participated.

The so-called Busan CFC, which received an investment of approximately 200 billion won, covers 42,000 square meters (452,100 square feet) and has a capacity to handle more than 45,000 different products — double the capacity of existing online logistics centers.

Utilizing a grid-like rail system called Hive and more than 1,000 robots communicating with servers, the Busan CFC automates processes including demand forecasting, inventory management, product picking, packing and route planning for dispatch. The facility emphasizes eco-friendliness by opting for electric vehicles for all deliveries and maintaining a rooftop parking lot equipped with a solar power generation facility with an annual capacity of 2,000 megawatt-hours.

The company plans to establish six CFCs nationwide by 2030. The second CFC is confirmed to be situated in the Seoul metropolitan area, catering to customers in Seoul, Gyeonggi, and Incheon.

“The Busan CFC marks the crucial cornerstone for Lotte's emerging online grocery business,” Lotte Shopping CEO Kim said.

BY SEO JI-EUN [seo.jieun1@joongang.co.kr]